What must sales be to achieve a monthly profit of $120,000?
This objective test question contains a question type which will only appear in a computer-based exam, but this question provides valuable practice for all students whichever version of the exam they are taking.
P CO makes two products – P1 and P2 – budgeted details of which are as follows:
P1 P2
$ $
Selling price 10.00 8.00
Cost per unit: Direct materials 3.50 4.00
Direct labour 1.50 1.00
Variable overhead 0.60 0.40
Fixed overhead 1.20 1.00
Profit per unit 3.20 1.60
Budgeted production and sales for the year ended 30 November 2015 are:
Product P1 10,000 units
Product P2 12,500 units
The fixed overhead costs included in P1 relate to apportionment of general overhead costs only. However P2 also includes specific fixed overheads totalling $2,500.
If only product P1 were to be made, how many units (to the nearest unit) would need to be sold in order to achieve a profit of $60,000 each year?
This objective test question contains a question type which will only appear in a computer-based exam, but this question provides valuable practice for all students whichever version of the exam they are taking.
The CS ratio for a business is 0.4 and its fixed costs are $1,600,000. Budget revenue has been set at 6 times the amount of the fixed costs.
What is the margin of safety % measured in revenue?
TIM produces and sells two products, the MK and the KL. The organisation expects to sell 1 MK for every 2 KLs and have monthly sales revenue of $150,000. The MK has a C/S ratio of 20% whereas the KL has a C/S ratio of 40%. Budgeted monthly fixed costs are $30,000.
Required
What is the budgeted breakeven sales revenue?
Refer back to the information in the paragraph following Question: C/S ratio for multiple products.
Suppose the organisation in question has fixed costs of $100,000, and wishes to earn total contribution of $200,000.
Required
What level of revenue must be achieved?
Sutton produces four products. Relevant data is shown below for period 2.
Product M Product A Product R Product P
C/S ratio 5% 10% 15% 20%
Maximum sales value $200,000 $120,000 $200,000 $180,000
Minimum sales value $50,000 $50,000 $20,000 $10,000
The fixed costs for period 2 are budgeted at $60,000.
Required
Fill in the blank in the sentence below.
The lowest breakeven sales value, subject to meeting the minimum sales value constraints, is $........…..
Fill in the blanks.
Breakeven point in units for a multi-product organisation = Total fixed costs divided by ___________ .
Breakeven point in sales revenue for a multi-product organisation = Total fixed costs divided by _________.
Fill in the blanks.
Mark the following on the breakeven chart below.
• Profit • Variable costs
• Sales revenue • Fixed costs
• Total costs • Breakeven point
• Margin of safety
Edward sells two products with selling prices and contributions as follows:
Edwards’s fixed costs are $1,400,000 per year.
What is Edwards’s current breakeven revenue to the nearest $?